Business needs certainty on share schemes

The about face by the Government on its disastrous tampering with the share ownership schemes is being welcomed by the business community.

But why? The only decision that should be welcomed by the business community is dumping the proposed new treatment so that business has certainty to plan the 2009-10 year.

There are reports that 450 of the top 500 companies so far have frozen or are reviewing their plans. Small and medium businesses are also in the same boat. And some start-ups who are counting on the scheme to encourage talent into their businesses that would normally migrate to large businesses are having to completely rethink their business models.

But instead of a complete backdown, which would have been bold and decisive, we now have to wait two weeks for an option paper which takes us almost to the start of the next financial year. That timing is so close, the likely option will be that many companies will simply have to be shelve their plans for a year, say tax experts.

The options being floated around are not helping. There are suggestions that whatever scheme the government adapts, people still might be forced to pay upfront tax. So the back down by the government has actually created more uncertainty in a very uncertain year and at a time when businesses could certainly use these schemes to motivate employees in lei of pay rises.

What the Government has to do is dump the new treatment and THEN announce an inquiry. That is a decision that would be truly welcomed by the business community.